Embracing Automation to Facilitate Near-sourcing

16th May 2023

Logistics BusinessEmbracing Automation to Facilitate Near-sourcing

Automotive Original Equipment Manufacturers (OEMs) have led the world in creating incredibly efficient, optimised, Just-in-Time (JiT) supply chains. However, the responsibility falls on their Tier 1 suppliers to ensure products arrive on time, in the right order, in perfect condition, and in accordance with each customer’s personal specification. With the rise of near sourcing in response to inconsistent Far East supply, pressure on suppliers is set to intensify. OEMs are likely to expect smaller, incremental deliveries that further enhance efficiency, making it imperative to automate loading and unloading processes. Wouter Satijn (pictured), Sales Director, Joloda Hydraroll, explains.

Reducing risk

Global car production volumes are forecast to grow by 5.3% in 2023, with Western Europe leading the charge after three years below 10 million units. However, while supply chain pressures are easing, many OEMs still face significant delays in sourcing key components, especially semiconductors, from the Far East. The resultant uncertainty is additional pressure on the tightly integrated supply chain.

After years spent building hugely complex and extended global supply chains, a serious change is afoot. Businesses recognise the challenges associated with single sourcing, especially to far-off locations with long lead times. The value of near sourcing is gaining ground fast, providing resilience and contingency while reducing risk. For Tier 1 suppliers under incredibly tight and punitive contracts with automotive OEMs, pressure to change is coming from all sides. Not only must companies explore local providers to safeguard their own supply chains, but they must also conform to the new supply chain designs created by OEMs.

Supply chain redesign

Suppliers have fine-tuned production processes to ensure products arrive at the OEM on time and 100% quality controlled. The problems arise when the goods are loaded from the supplier’s warehouse and unloaded at the OEM. Unloading and loading processes are still predominantly manual at many facilities. Companies rely on labour and forklift trucks, winches and ropes to move heavy and potentially dangerous items from the truck to the shop floor. The problem is that this process is both time-consuming – potentially jeopardising delivery schedules – and high risk. From colour-specific bodywork to custom-designed entertainment systems, product damage leads to production delays that can cost £10,000s to the OEM. This results in conflict between the companies as blame is apportioned and potentially significant fines applied to the supplier.

The shift towards near sourcing will exacerbate these issues. Supply chain redesign will lead OEMs towards smaller, incremental deliveries, creating more risk and pressure for suppliers. It is now vital to move away from manual processes and embrace faster, more efficient, safe and controlled unloading and loading.

Improving control

Automated loading radically reduces the risk associated with product damage, eradicating reliance on forklifts and avoiding human error. Plus, automated loading systems are significantly faster and more efficient: manual processes that currently take more than half an hour can be achieved in two or three minutes. With the certainty that drivers will not be left waiting for hours outside the facility, suppliers can also reduce the contingency required in their delivery schedules.

Better control, certainty, and a reduced risk of product damage during the loading and unloading of trucks will enable OEMs and suppliers to confidently embark upon a new supply chain model. They can embrace the value of near sourcing and incremental delivery, improving agility in an uncertain marketplace.